Notice of Proposed Rulemaking on Modifications to the Enhanced Supplementary Leverage Ratio (eSLR) Standards

Summary:

The Office of the Comptroller of the Currency, Board of Governors of the Federal Reserve System (Federal Reserve), and Federal Deposit Insurance Corporation (together, the agencies) are inviting public comment on a notice of proposed rulemaking (proposal) to modify the enhanced supplementary leverage ratio (eSLR) standards applicable to U.S. bank holding companies identified as global systemically important bank holding companies (GSIBs) and their depository institution subsidiaries. In addition, the Federal Reserve is proposing to amend its total loss-absorbing capacity and long-term debt (LTD) requirements applicable to GSIBs to align with the proposed eSLR standards for GSIBs.

Statement of Applicability: The contents of, and materials referenced in, this FIL apply to depository institution subsidiaries of U.S. global systemically important bank holding companies.

Highlights:

• The proposal would recalibrate the eSLR standards to help ensure the SLR generally serves as a backstop to risk-based capital requirements and to address disincentives banking organizations subject to eSLR standards may have to engage in low-risk, low-return activities, including U.S. Treasury market intermediation.
• Under the proposal, a GSIB’s eSLR must be equal to or greater than the 3 percent SLR plus 50 percent of its Method 1 GSIB surcharge to avoid limitations on its capital distributions and certain discretionary bonus payments, rather than the current 5 percent eSLR standard.
• The depository institution subsidiary of a GSIB would be subject to the same eSLR standard as its parent:
  • To avoid limitations on capital distributions and certain discretionary bonus payments, such depository institutions would need to meet an eSLR standard equal to the 3 percent SLR plus 50 percent of the parent’s Method 1 GSIB surcharge, rather than the current 6 percent eSLR standard.
• The Federal Reserve’s proposal would also make conforming modifications to the TLAC leverage buffer and the external LTD requirement. The 2 percent TLAC leverage-based buffer and the external leverage-based LTD requirement would be revised to reflect the proposed change to the eSLR standards for GSIBs.
• Comments are due by August 26, 2025.